In the latest rate case scheduled to take effect in early 2001, the U.S. Postal Service proposed a new name for Standard Mail (B). The new name, Package Services, will still consist of the four current subclasses: Parcel Post, Bound Printed Matter, Library Mail and Media Mail (currently Special Standard). In addition, destination-entered Parcel Post mail will also be renamed Parcel Select.
Separate Rates for Media & Library Mail
While current rates for Media and Library Mail are identical, the USPS has proposed separate rates for the two subclasses. Rates for Media Mail, including such items as CDs and videos, would be raised an average of 4.9%, representing a cost coverage of 112.5%. The proposed rates for Library Mail, which generally is used for mailings between libraries and schools, would increase an average of 4.5%, with a cost coverage of 104.7%. As a result, Library Mail rates would be an average 0.4% less then Media Mail rates.
Drop Shipping Incentives
While Bound Printed Matter rates are proposed to increase an average of 18.1%, three new destination discounts are introduced to provide mailers with opportunities to reduce postage costs. The Postal Service has proposed discounts for mail drop shipped to a Bulk Mail Center, Sectional Center Facility or Destination Delivery Unit, which are designed to increase drop shipping.
As you can see by the table below, the proposed Destination Entry postage is actually less than the current two-pound Zone 5 basic presort postage of $1.062. Destination Entry Zone 3 postage would be indicative of a mailing drop shipped at the BMC. For example, proposed Zone 5 basic presort postage for a two-pound book mailed at origin would increase from $1.062 to $1.323. The proposed Destination Entry postage is represented in the table below.
The proposed 18.1% increase represents a 117.6% cost coverage. The new destination discount rate structure is similar to Parcel Post and Parcel Select. The Delivery Unit discount would replace the current local rate. As proposed, the above example would reduce a 25% postage increase to postage savings of up to 37%. A two-pound book currently pays a Zone 3 basic presort postage of 86.6.. The proposed Destination Entry Zone 3 postage would increase to $1.015, or 17%. However, the proposed SCF rate of 72.9. would reduce postage 13.7. ($6.85/cwt.), or 16%.
Currently, the local carrier route rate for a two-pound catalog is 51.9.. The proposed comparable DDU rate is 59.7., an increase of 7.8., or 15%. The Postal Service has proposed a five-digit sort to obtain the SCF and DDU discounts.
Parcel Post and Parcel Select Rates
Average Parcel Post and Parcel Select (currently Destination Entry) rates would increase by 1.3%. According to the U.S. Postal Service, this is a 114.1% cost coverage. For Parcel Select, the proposed DDU and SCF rates would not change. Zone 3 Parcel Select rates for packages weighing less than seven pounds reflect a reduction from current rates of up to 5.. For example, currently, the five-pound Parcel Select Zone 3 rate is $3.45. The proposed five-pound Parcel Select Zone 3 rate is reduced 2. to $3.43.
A proposed new surcharge would add 45. per piece to nonmachineable parcels drop shipped at the · BMC. This surcharge would not apply to nonmachineable parcels drop shipped at the SCF and DDU. Therefore, a five-pound nonmachineable parcel drop shipped to a DDU, rather than to a BMC (Zone 2), could realize a postage savings of $1.81 based on the proposed rates.
Parcel Post Machineable Rates Inter-BMC
In Parcel Post Machineable Inter-BMC, the rate increases by approximately 10%. Currently, the five-pound Parcel Post Inter-BMC Zone 5 rate is $6.45. The proposed rate would increase 65. to $7.10. The Origin BMC discount increases from 57. to 93. per piece. Additionally, the BMC presort discount increased from 22. to 23. per piece. Using these proposed discounts, net postage for a Zone 5 Parcel Post Inter-BMC five-pound parcel is $5.94. When compared to the Parcel Select Zone 3 rate of $3.43, potential drop shipping savings of $2.51 could be realized. The proposed savings would increase 30. from the current savings of $2.21.
Currently, the five-pound Parcel Post Inter-BMC Zone 5 rate of $6.45 is 5. less than the five-pound Priority Mail rate of $6.50. As a result, there is a greater tendency to pay a little more postage to obtain fast delivery by using Priority Mail. In the proposed rates, Priority Mail would be less attractive since the rate differences increase to 50.. A five-pound Priority Mail package would cost $7.60, while the Zone 5 Parcel Post cost would be $7.10. The proposed increase in Priority Mail rates could shift more packages to Parcel Post.
Parcel Post Nonmachineable Rates Inter-BMC
Under the proposal, rates for Parcel Post Nonmachineable Inter-BMC would increase by nearly 10%. For example, the five-pound Zone 5 rate would increase from $8.10 to $8.89, or 9.8%. Compared to the proposed Parcel Select Zone 3 (drop shipping) rate of $3.43, plus the new surcharge of 45., a five-pound parcel could save $5.01. With the proposed rates, savings would increase 36., from $4.65 to $5.01.
Parcel Post Intra-BMC Rates
For Parcel Post Intra-BMC, proposed rates would increase from 5% to I0%. In Zone 3, the five-pound rate would increase from $3.85 to $4.19, or 8.8%. A new nonmachineable surcharge of 40. per piece is proposed for nonmachineable Intra-BMC parcels.
Minimum Weight
An adjustment to the minimum weight will allow mailers to use Package Services rates for pieces weighing less than 16 ounces. These pieces would pay the minimum weight Package Services rate and are eligible to use Special Services such as Delivery Confirmation, Return Receipt for Merchandise and Bulk Insurance. As a result of this weight adjustment, Standard Mail Regular and Nonprofit will have the option of mailing at Package Services rates.
Barcode Discount
The barcode discount for machineable Package Services Mail would hold at 3. per piece when entered at the BMCs.
Delivery Confirmation
The fee for electronic confirmation remains at 25., while the manual fee would increase from 60. to 65., or 8%.
Clarence Banks is the manager of Postal Affairs for R.R. Donnelley & Sons Company. For more information, visit www.rrdonnelley.com.
Joe Divito is the director of Experian, a provider of products and services to the direct marketing, database marketing, e-commerce and reference industries. For more information, visit www.experian.com.
The Direct Marketing Association is a comprehensive resource on postal rates and postal reform. For more information, visit www.the-dma.org.
